American States Water Company

Q1 2023 Earnings Conference Call

5/11/2023

spk01: Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company conference call discussing the company's first quarter 2023 results. The call is being recorded. If you would like to listen to a replay of this call, it will begin this afternoon at 5 p.m. Eastern Time and run through Thursday, May 18, 2023 on the company's website, www.aswater.com. The slides that the company will be referring to are also available on the website. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. This call will be limited to an hour. Presenting today from American States Water Company are Bob Sprouse, President and Chief Executive Officer, and Eva Tang, Senior Vice President of Finance and Chief Financial Officer. As a reminder, certain matters discussed during this conference call may be forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. please review a description of the company's risks and uncertainties in our most recent Form 10-K and Form 10-Q on file with the Securities and Exchange Commission. In addition, this conference call will include a discussion of certain measures that are not prepared in accordance with generally accepted accounting principles or GAAP in the United States and constitute non-GAAP financial measures under SEC rules. These non-GAAP financial measures are derived from consolidated financial information but are not presented in our financial statements that are prepared in accordance with GAAP. For more details, please refer to the press release. At this time, I will turn the call over to Bob Sprouls, President and Chief Executive Officer of American States Water Company.
spk04: Thank you, Gary. Welcome, everyone, and thank you for joining us today. I'll begin with some brief comments on the quarter. Eva will then discuss some financial details, and then I'll wrap it up with updates on regulatory activity, ASUS, dividends, and then we'll take your questions. I'm pleased to report that our adjusted earnings for the first quarter of 2023 were 13 cents per share higher than adjusted earnings for the first quarter of 2022. The higher earnings performance in 2023 was aided by the receipt of a proposed decision in Golden State Water Company's Water General Rate Case, or GRC, from the California Public Utilities Commission, or CPUC, during April, and strong earnings at our contracted services business, American States Utility Services, or ASUS. The proposed decision allows us to continue investing in the utility infrastructure to provide safe and reliable water services for the communities we serve. It sets new water rates for the years 2022 through 2024 and is retroactive to January 1st, 2022. We remain committed to spending $140 to $160 million this year in infrastructure investments at our regulated utilities, fortifying our water and electric systems to serve our customers for generations to come. ASUS also performed $18.9 million of construction work during the quarter and is on pace to meet its targeted earnings contribution of $0.45 to $0.49 per share for 2023. Eva will discuss the quarterly earnings and liquidity, and I'll turn the call over to her.
spk05: Thank you, Bob. Hello, everyone. Let me start with our first quarter results. Consolidated earnings as recorded were $0.93 per share as compared to $0.38 per share for the first quarter of 2022, an increase of $0.55 per share. Included in the results of the first quarter was $0.36 per share related to the impact of retroactive rates found the proposed decision in the Water General Rate Case for the full year of 2022, of which $0.08 per share relates to the first quarter of 2022. The $0.55 per share increase also included a favorable variance of $0.06 per share from investment held to fund a retirement plan. We recorded gains on this investment of $1.6 million for the quarter, as compared to losses of $1.7 million in 2022. Excluding these two items, adjusted consolidated earnings for the quarter were $0.34 per share as compared to adjusted earnings of $0.41 per share for the first quarter of last year, an increase of $0.13 per share. For our water utility subsidiaries, Golden State Water Company, reported earnings were $0.74 per share as compared to $0.23 per share for the first quarter of 2022, a $0.51 increase. Both items just discussed affected earnings at a water segment. So factoring the same effect from the two items, adjusted earnings for the first quarter at a water segment were $0.35 per share, which was an increase of $0.09 per share as compared to adjusted earnings of $0.26 per share for the same period in 2022. Since 2023 is the second year of the GRC, an estimated second year rate increases effective January this year has been accounted for in the quarter. The $0.09 per share increase in 2023 adjusted earnings Largely, we present the difference from the 2021 adopted rates and the 2023 estimated second-year increases for the first quarter, partially offset by increases in operating and interest and other expenses. Our electric segments earning were $0.06 per share for the first quarter as compared to $0.07 per share for the same period last year. The decrease primarily related to not having new rates in effect yet for 2023, as we await the pending electric GRC that will set new rates for 2023 through 2026, while also experiencing continued increases in overall operating expenses and interest costs. When a decision is issued in the electric GRC New rates are expected to be retroactive to January 1, 2023, and cumulative adjustments will be recorded at that time. Earnings from our contracted service segment increased 7 cents per share for the quarter, which Bob will discuss later. Consolidated revenue for the first quarter increased by $52.8 million as compared to the same period last year. Revenue for the water segment increased by $38.8 million, which includes the impact of retroactive new rates for the full year of 2022 of $30.3 million, and the estimated 2023 revenue increases of $8.7 million for the three months ended March 31 this year. The increase in electric revenue was primarily attributed to a vice-ledger filing and an expense allocation true-up as a result of the proposed water GRC decision. The increase in the general office expenses allocated to the electric segment also include a corresponding offsetting increase in adopted electric revenues, resulting in no impact to earnings. there was an increase in revenue of $13 million from our contracted services. Turning to slide 9, looking at total operating expenses other than supply costs, consolidated expenses increased $12.2 million as compared to the first quarter of 2022. The increase was largely due to an increase in construction costs at our contracted services segments resulting from higher construction activity due to timing differences when construction work was performed in 2023 as compared to the first quarter last year, and higher operation administrative and general and depreciation expenses. The proposed decision in the Water GRC issued in April also approved overall higher composite depreciation rates based on a revised depreciation study. The increase in composite depreciation rates increases the adopted water revenue requirements with a corresponding increase in adopted depreciation expense resulting no impact to net earnings. Interest expense net of interest income increased by $2.3 million due to higher average interest rates during the quarter and increases in overall borrowing level. Other income net of other expenses increased by $2 million due primarily to gains on investment held for retirement benefit plans, partially offset by increasing the non-service cost component for Golden State Waters benefit plan. Slide 10 shows the adjusted EPS bridge comparing the first quarter of 2023 and 2022. Turning to liquidity on slide 11, net cash provided by operating activities was $7 million as compared to $38 million for the first quarter of 2022. During the first quarter of last year, our regulated utility received $9.8 million in COVID-19 relief funds from the state of California to provide assistance to customers for delinquent water and electric customer bills incurred during the pandemic. There were no relief funds received this year. The decrease in operating cash flow was also due to a 17% decrease in billed water consumption, as well as the continued delays in receiving the WaterGRC final decision. Once the final decision is received, Golden State Water will request recovery through a surcharge of all retroactive revenue accumulated since January 2022. In addition, we will also file for the second year rate increases for 2023. In January 2023, Golden State Water received $130 million of proceeds from the issuance of unsecured private placement notes. The proceeds were ultimately used to partially pay down AWR's credit facility and further support the Golden State Waters capital program. AWR's credit facility with a borrowing capacity of $280 million expires in July 2023 as a result of an amendment that extended the maturity date by two months. We requested the extension to provide us adequate time to possibly put in place two new credit agreements. SMT provides the same credit rating for both Consolidated AWR and Golden State Water. We are considering a separate credit facility for Golden State Water to allow for a separate credit rating and possibly improve the rating outlook for our flagship water utility. While lining up two credit facilities instead of one takes a little longer time, we believe that the company's sound capital structure and the A-plus credit ratings for American states and Golden State waters, combined with its financial discipline and history and relationship with lenders, will enable us to access the debt market and put in place a new credit facility with reasonable terms. We anticipate the existing credit agreement will be terminated at an earlier date when it's superseded by the new agreement. At this time, we do not expect the American state water to issue additional equity for at least the next 18 to 24 months to fund its current businesses. We will continue to assess the need for equity assurance And even when a decision is made to issue equity, we plan to raise capital over time. We will consider doing an ad market offering that enables AWRs to control the timing and size of sales of its common shares over several years. With that, I'll turn the call back to Bob.
spk04: Thank you, Eva. I will discuss a few key regulatory matters. Earlier, I discussed the proposed decision we received in the water general rate case. Among other items, the proposed decision approves and adopts in its entirety the settlement agreement between Golden State Water and the Public Advocates Office at the CPUC that had been filed with the CPUC in November 2021 and resolves all issues related to the 2022 annual revenue requirement in the rate case application retroactive to January 1, 2022. Furthermore, the proposed decision addressed the three remaining unresolved issues related to Golden State Water's request for a medical insurance balancing account, a general liability insurance cost balancing account, and consolidation of two of Golden State Water's customer service areas. The proposed decision approved both balancing accounts and denied Golden State Water's request to consolidate the two customer service areas. The settlement agreement approved in the proposed decision authorized Golden State Water to invest $404.8 million in capital infrastructure over the three-year cycle, plus $9.4 million of capital projects that have been completed and filed as advice letter projects the revenue for which was in effect in February of 2022. It increases Gold State Water's adopted operating revenues for 2022 by $30.3 million, which includes an increase for higher adopted supply costs of $9.6 million, and compared to the 2021 adopted revenues, excluding the advice letter project revenues. Sorry, as compared to the 2021 adopted revenues, excluding the advice letter project revenues. It adopts new operating expense levels for 2022, including higher depreciation expense resulting from overall higher composite depreciation rates based on a new depreciation study adopted in the proposed decision. And it allows for potential additional increases in adopted revenues for 2023 and 2024, subject to an earnings test and changes to the forecasted inflationary index values. We're now in the process of preparing our next water general rate case for the years 2025 through 2027. to be filed in the third quarter of this year. As you may have seen, Golden State Water received a proposed decision on Tuesday of this week on the cost of capital proceeding. The proposed decision adopts the requested capital structure and cost of debt filed in the application. It adopts a return on equity of 8.85%. It allows for the continuation of the water cost of capital mechanism and adopts the new cost of capital from January 1st, 2022 through December 31st, 2024. As discussed on prior calls, we have continued to record in the first quarter a reduction to water revenues, which decreased the first quarter earnings by 3 cents per share to reflect the estimated revenue impact of a lower cost of debt of 5.1% as requested in our cost of capital application, as compared to 6.6% included in 2021 rates currently being billed to water customers. A similar adjustment based on the 2021 adopted rates was made throughout 2022. Also, An additional reduction to revenues of $1.1 million, or two cents per share, was included in the impact of retroactive new rates for the full year of 2022 in arriving at the 36 cents per share adjustment. That represents the incremental impact of revenues subject to refund related to the cost of capital proceedings. As previously mentioned, the proposed decision allows for the continuation of the water cost to capital mechanism. For the period from October 1st, 2021 through to September 30th, 2022, the Moody's AA utility bond rate increased by more than 100 basis points from the benchmark. As you may know, if there is a positive or negative change of more than 100 basis points, return on equity is adjusted by one half of the difference. As a result of the proposed decision, the water cost of capital mechanism will continue through 2024. Moving on to slide 14, our electric utility subsidiary filed its general rate case on August 30th, 2022. for new rates for the period 2023 through 2026. In addition to new rates, there are a number of items that are requested, such as additional capital expenditures as part of the four-year rate cycle and a new capital structure. In addition, we have requested the recovery of more than $22 million in capital already spent related to the wildfire mitigation plans. The CPUC has approved a decision for a general rate case memorandum account that will make new rates once approved in a CPUC final decision effective January 1st, 2023. Turning our attention to slide 15, we present the growth in Golden State Waters average rate base as authorized by the CPUC for 2018 through 2021. Weighted average water rate base has grown from $752.2 million in 2018 to $980.4 million in 2021. Based on the general rate case settlement agreement as approved and adopted by the proposed decision, the 2022 rate base amount is $1,152.3 million. which, if approved, would result in a compound annual growth rate of 11.3% since 2018. The rate-based amounts shown for 2021 and 2022 do not include any rate recovery for advice letter projects. Let's move on to ASUS. I'm pleased to announce that ASUS contributed earnings of 15 cents per share for the first quarter as compared to eight cents per share for the same period last year, an increase of seven cents per share. The increase was largely due to an increase in construction activity in the first quarter of 2023 as compared to the same period last year due to timing differences of when construction work was performed and an increase in management fee revenue, resulting from the resolution of various economic price adjustments, partially offset by higher overall operating expenses and interest costs as compared to the same period of 2022. As mentioned earlier, ASUS is on target to contribute 45 cents to 49 cents per share for the year. the completion of filings for economic price adjustments, requests for equitable adjustment, asset transfers and contract modifications awarded for new projects, provide ASUS with additional revenues and dollar margin. We remain confident that we can effectively compete for new military-based contract awards based on our proven track record of managing water and wastewater-related services for a military basis since 2004. I'd like to turn our attention to dividends, which remain a compelling part of our investment story. The company has achieved a compound annual growth rate of 9.2% in our calendar year dividend payments to shareholders over the last 10 years. These increases are consistent. with our policy to achieve a compound annual growth rate in the dividend of more than 7% over the long term. I'd like to conclude our prepared remarks by thanking you for your interest in American States water and will now turn the call over to the operator for questions.
spk01: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. The first question is from Angie Storizynski with Seaport. Please go ahead.
spk06: Thank you, and good morning, I guess, to you guys. Hello. So first with the proposed decision and the cost of capital, it's interesting because I don't even know when it really applies. So, you know, your best guess, is it truly retroactive to January 1 of 2022, i.e. this provision that you guys have been booking for the lower cost of debt period? would basically stick based on it?
spk04: Yeah, so it's not entirely clear to us, Angie. One interesting item to note in the proposed decision is it does not expressly state that the lower cost of debt for 2022 and 2023 and the lower cost of equity for 2022, partially offset by the higher return on equity for 2023, all of which are set forth in the proposed decision, doesn't really state that they should be retroactive to the beginning of 2022. Since the ordering paragraphs solely focus on future rate changes, it could be interpreted that it was the ALJ's intent to make all these changes solely prospective. And we don't know what the ALJ's intent is. More to come on that.
spk06: Okay. But if under the assumption that those are prospective changes, meaning the rates would be adjusted starting only basically mid-year, right, after the commission signs off on it, what would be, if I were to reverse the provisions associated with the lower cost of debt, what would be the add-back to 2023 from an EPS perspective?
spk04: Yeah, so we'd have the add-back for 2022 to start with. That was roughly $0.15. Yeah.
spk05: And it would book additional $0.03 for the first quarter of this year. So NG in total up to March 31st, that would be $0.18 that we'll be adding back.
spk04: You know, it's possible we won't get a final in the second quarter, but we think we will if we don't. you know, hopefully we'll have a little more clarity as where they're headed on this so that we can deal with it appropriately in the second quarter.
spk06: Okay. Well, that's just the first half of the question, right? The second one is when would the cost of capital adjustment mechanism kick in, right? So would it be, I mean, there are really only two options, right? Either coincidental with the new rates so meaning half, middle of the year, or actually, no, there would be three. I mean, there could be 1-1-23, could be mid-2023, or you need to file and request that increase, and only then it would kick in. So there's a third option, meaning it could get delayed until, I don't know, like a September timeframe.
spk04: Right, and we... That would be fair.
spk06: Yeah, there's all of the... That would be fair.
spk04: 2022 adjustment, although it's very small for us, five basis points.
spk06: So your current guess would be that it happens, that it coincides with the reduction in the cost of debt, meaning roughly mid-year?
spk04: Yeah, I mean, to be fair, we've had this for decades. Day and a half. But, yeah, we think the two would be sort of move in lockstep. Although, you know, we may know more as we move through time here. We probably will.
spk06: And so now, the last one on this one, I promise. So now, assuming that we are doing it starting mid-year, so the cost of debt down, cost of equity up, Well, whatever, by that 51 bits minus the five bits, right? So, right? I mean, if I get it right, 46 bits increase in the ROE starting mid-year. So how big an increase does that have? Big an impact on an annualized basis does it have from an EPS perspective? Yes.
spk05: Okay, so I'll take that one. Angie, well, you booked to the 5.1 debt, right? So that's reflecting our recorded number. So we'll be upside from the 8.9 to the 9.36%, 46 basis points. 46 basis points on our $1.2 billion rate base. I think it translates about $0.08 to $0.09 for the full year. So it depends on the system. for the full year of perspective. So you have to count that into your equation.
spk06: Okay. Okay. Well, I mean, it's complicated, but frankly, we're just so much further in this whole process than we were on the fourth quarter call that it's, you know, again, it's just frankly remarkable that now both the GRC and this issue have been almost resolved. Well, almost. So moving on to the electric jersey, just looking at the schedule, so we're still, I mean, we're still expecting a decision in that proceeding to be issued only next year, right? I mean, again, realistically speaking.
spk04: Yes. It's possible we could get something in 2023, but I would say unlikely.
spk06: Okay. And my last question, this two cents drag at the corporate level, I mean, yes, we did expect an increase in the interest expense there, but now that you'll have a true up in revenues, should I assume that this quarterly drag is actually slightly slower because, you know, I get actually cash recognition of some of the deferred revenues?
spk04: You're talking about the unfavorable variance of two cents at the parent?
spk06: Yes, yes. So I'm basically asking, is it a recurring two cents per quarter? It is.
spk04: It is because it really is a function of the borrowings we have at the parent that are not tied to borrowings at the utility.
spk06: Okay. That's all I have for now. Thank you. Thank you.
spk03: Thank you, Angie. Thank you.
spk01: The next question is from Jonathan Reeder with Wells Fargo. Please go ahead.
spk02: Hey, good morning, Bob and Eva. Congrats on getting the two PDs long-awaited, but I guess when it rains, it pours in California, right?
spk04: That is true. It's a lot of different stuff. It's been like raining every other day.
spk02: So just wanted to keep going on the cost of capital proposed decision a little bit. So obviously, it took a lot of time to get this proposed decision Don't know if you have any sense, you know, how much maybe influence the commission might have had on this proposed decision, you know, and kind of like what the thoughts are and the likelihood of the commission adopting the proposed decision as it is, you know, or whether, you know, like some past cost capital proceedings on the water side, whether they, you know, modify the PD before adopting something.
spk04: Yeah, so I mean, utilities, our company is analyzing the proposed decision and determining whether we like it or not. And so I'm sure the other three utilities are doing the same, and then Public Advocates is doing the same. So then the question becomes, is anyone going to be lobbying the commission to get this changed? And I'd say it's too early to tell. I don't know that the other commissioners on their own would necessarily have an issue with this decision, but there's just going to be a lot more on this here. We're just so early into the process. We don't completely understand what the decision says in terms of this retroactivity, to be honest. So that will be something we'll have to get more clarity on. Sorry, I can't be more definitive than that. What's your view, Jonathan? I know you have a report out on it.
spk02: Well, I don't know. If history is any precedent, then they'll modify it some. But, no, I mean, you certainly raise a good point. I mean, if you guys or, you know, PAO, if they don't, you know, raise issues with it, then – you know, why wouldn't the commission, I guess, kind of adopt it?
spk04: So, yeah, I guess we'll... Right, and I don't know where public advocates is on this, too. You know, I don't know how they feel about it. You know, they had lower recommended adopted ROEs for 2022, but, I mean, that was... back in 2021 when everybody filed. We now know where interest rates were in 2022. Usually it's supposed to be that you're supposed to try to predict where the interest rates are going, but we now know. Anyway, I'm sorry I can't be more helpful than that. This isn't like 2018 though, Jonathan, which I know you remember, which was just awful. The proposed decision was awful.
spk02: Right. Right. No, right. That one was very one-sided where, right. To your point, I mean, this one, the ROE, the ROEs proposed seem to, you know, kind of meet in the middle to some degree and everything. And then you have the cost of capital mechanism kind of resets and everything. So yeah, no, I, I just, you know, if you had any thoughts or if there was any, you know, early rumblings or, you know, just, just because it did take so long, if, you know, there was some sort of messaging that, you know, this is very much indicative of where the commission wants to come out, whereas, you know, past ones, maybe that hasn't been the case.
spk04: Right. Is it just the view of the ALJ and the assigned commissioner or are the other commissioners, have they had a chance to weigh in at this point? I don't know the answer to that. I'm sorry. Yeah. You know, I always... when these things come out, as you know, and this didn't... Well, I was here in 2018, and that's just... Anything compared to that is, you know, you take a little bit of a sigh of relief.
spk02: Yeah, no, I agree. I agree. So, yeah, no, we'll stay tuned, and good luck on getting it across the finish line. The other topic I wanted to touch on, and, Eva, I know you discussed in your prepared remarks a bit, but, you know, the discussion in the queue around the credit facility... and the need to do a two-month extension. I mean, it just really struck me as odd. I mean, it seems like, you know, most companies extend or, you know, renew the facilities well in advance of the expiration date. So, I mean, I know you mentioned in the prepared remarks that it takes additional time to do the two, you know, credit facilities. But again, I would have thought that this could have been done, you know, well in advance of the current facility kind of expiring. So, I guess the question is, do you think, you know, The two-month extension, is that going to be enough time to get the new ones in place? And have these efforts been impacted in any way by the upheaval in the banking industry the last few months?
spk05: Yeah, Jonathan, we extended two months, but we expect to get it done well ahead of that. So we just don't want to be stretched to the last day of the credit facility and doesn't allow anything. So it's really a more conservative approach. We expect to get it done much earlier than the two-month extension deadline. You know, we met, this came about when Bob and I met with SMP in December and, you know, looking to how we can get a separate rating for Golden State Water and took a lot of research and talking to SMP to come to this kind of intention that we're And the amount will be larger, too, on the credit facility. We had 280. You know, this rate case, we got much higher capital expenditure than last rate case. And we anticipate that rebates will grow when we file the rate case in August. So to support the next few years, the CapEx and, you know, with uncertainty of PFAS, and we are asking for much bigger. credit line amount, it probably would take a syndicated effort to put it together for two credit facilities. That's why it takes longer when we start this process.
spk04: Just to add in there, we are a bigger company than we were five years ago, and we now have to have larger financing capabilities because of that and because of our CapEx program. And, you know, I do think the upheaval in the banking industry probably didn't help us at all here. So it's just a number of things. But, you know, the splitting the credit facility into two pieces, I think long-term that's going to be a real advantage to the company. And, you know, it takes more time to do that. And should we have started earlier? Maybe. But... I don't think this is anything people should be worried about on the facility. All it is is a function of the size, and we did increase the complexity a bit, I would say.
spk02: Okay, yeah, no, I mean, and that's the thing. I mean, obviously, the credit rating is extremely strong where it is, so, you know, you wouldn't have thought, like, getting a new facility would be an issue. So I appreciate the additional comments there. as to, you know, what was kind of going on with it. Sounds like, you know, maybe in the weeks ahead should have something new in place if I'm reading the tea leaves correctly, so that's good. Last comment just on, you know, PFAS. I know the other companies have been addressing it. Based on your service territory, like how big of an issue is that and, you know, how would that potentially impact the CapEx budget or the upcoming rate filing and stuff?
spk04: Yeah, I can give you a little bit of detail on that. So at this point, we've tested 78 wells at the company. Basically, at the state's direction, they identify sort of what areas you need to be doing these tests on. And then we have found 25 of the 78 that are over the state's notification levels and nine over the state's response levels. Now these notification and response levels are actually higher than what the EPA of four parts per trillion is. And so we're going through the process So we've got 34 wells of the 78 that have issues, and it costs between 2 million and 5 million per well to retrofit them for this issue. We also have more wells than the 78. We've got a total of 170. So we can't really estimate at this point what the cost of getting everything sort of up to where the standards are for the four parts per trillion. But, you know, it's going to be sizable CapEx. I don't know, Jonathan, whether the four parts per trillion is going to stick or not. I know it came in a bit lower than what the industry was expecting.
spk02: Yeah. How does the, I guess, the four parts per trillion compare to then, like, the state levels? Because, I mean, I guess the two to $2 to $5 million cost you kind of threw out there. That's just to retrofit them in accordance with the state standards, or would that also?
spk04: It is, but it doesn't jump considerably when you reduce down to the four parts per trillion. Not a big jump there, because you're kind of putting in the materials at that point.
spk02: Okay, and so out of those 78 that you tested, I know you said 34 have issues with the state standards. Do you know how many of those would have issues with the four parts per trillion standard?
spk04: Yeah, all of them.
spk02: Okay, so it could extend beyond those 70, 80, and that's why you threw out the 170, I guess.
spk04: You know, it is possible, yeah, because the current state standard is higher than what the federal is.
spk02: Okay. All right. Are you going to try to... encapsulate this at all in the upcoming, like, rate case filing, or would this be potentially something separate, you know, until you see what the EPA, you know, settles on if it is four parts per trillion and kind of what the compliance timeframe is and everything?
spk05: So we're still working on the rate case at this point. Jonathan, we're looking at the possibility of putting a strong testimony on additional cutbacks and, you know, the water supply mix impact, et cetera. So we don't have a number at this point, but, you know, we'll disclose that when we're ready to file the decision, I think, by August 1st.
spk02: Okay. Okay. All right. Thanks for the time today on the call. I appreciate it.
spk05: Thank you. Thank you, Jonathan.
spk01: This concludes our question and answer session. I would like to turn the conference back over to Bob Sprouse for any closing remarks.
spk04: Thank you, Gary. I just want to wrap it up today by thanking you all for your participation, and we look forward to speaking with you next quarter. So have a good rest of your week and a good start to your summer.
spk01: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Disclaimer

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